KYC

&
Documentation

Presented by:
Mahbub-ul-Kader, CAMS
CAMLCO
IDLC Finance Limited
Why FIs are Concerned?

Criminal
Monetary Prosecution Cancel Branch Reputation
penalty License Loss of Career Damage
&
Imprisonment

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Know Your Customer

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KYC Jokes - America

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KYC Jokes- Saudi Arabia

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Steps in KYC
Collect complete & correct information about customer
& maintaining documentation on the same

Verify genuineness of information

Review customer profile with the transactions

Risk Assessment of the customer

In case of high risk customer, conduct Enhanced Due

Diligence (EDD)

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Steps in KYC
Keep close monitoring & submit STR in applicable
cases

KYC profile should be certified by the competent

approving authority

KYC has to be updated on regular basis

For high risk customer- KYC profile should be

reviewed & updated at least once in a year

For low risk customer-KYC profile should be reviewed

& updated once in every two years

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Matching customer profile with transaction

Compare with
Identify the amount of Open account with
Customers Satisfied?
Transaction Yes usual documentation
Profile
No
Obtain understanding on
how the additional fund was
derived

Obtain Proper
Documentation

Open the account Yes

with proper Satisfied
documentation
No

Open the account and

submit STR
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Enhanced Due Diligence
EDD should be Exercised

Collect additional information about customer and update it in a regular interval (profession, amount of
asset, explanation against the complex/ abnormal/ large transactions)

If the fund is coming from a person other than the accountholder

When establishing any business relationship with those persons/ entities who are originally
incorporated/registered in a non-complaint country/high risk and non-cooperative Jurisdictions (Mexico/
Kenya/ Iran/ Nigeria/DPRK etc.)
Assess ML/TF risk and take necessary steps to mitigate the identified risks

Continuous monitoring of customers transactions to detect STR/SAR

Business relationship to be established subject to approval from top Mgt
Enhanced Due Diligence
EDD should be Exercised

Politically Exposed Persons (PEPs)

Local Influential Persons (LIPs)
Non Face-to-Face Customer (NFFC)
Head or Members of Senior Mgt of International Organization
Customers involved in the business of gold, precious stones, jewelry, money
exchange, courier company

High Risk Customers as identified by the respective FI

Politically Exposed Persons
PEP means-
Individuals who are or have been entrusted with prominent public functions in a
foreign country, for example-

Head of State or of government

Senior Politicians
Senior Government Officials
Judicial or Military Officials
Senior Executives of State Owned Corporations
Important Political Party Officials
& their family members and close associates
Middle ranking or junior individuals of the aforesaid positions will not be considered as PEPs
Local Influential Persons
LIP means-

Individuals who are or have been entrusted domestically with prominent public
functions, for example-

Head of State or of Government

Senior Politicians
Senior Government Officials
Judicial or Military Officials
Senior Executives of State Owned Corporations
important Political Party Officials
& their family members and close associates
Middle ranking or junior individuals of the aforesaid positions will not be considered as LIPs
Non Face-to-Face Customer

NFFC means-

Those who are not coming to FIs office physically to open the account but he/she
opening and operating the account through-

Agent
Legal Representative
professional Representative
Lawyer
Accountant etc
Head or Member of Senior Mgt of International Organization

MIO means-
Persons who are or have been entrusted with a prominent function by an
International Organization refers to-

Members of Senior Management

Directors
Deputy Directors
Members of the Board or Equivalent Functions
& their family members and close associates
Middle ranking or junior individuals of the aforesaid positions will not be considered as MIOs

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At a Glance

KYC =CCC
Complete

Correct

Certified

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 Customer
Identification
Guideline

How to Identify Customer

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Individual & Proprietorship Business

Individual:
NID, Passport or Driving license
Any other photo ID issued by government agencies

Proprietorship Business:
Applicable ID of proprietor
Trade license of business

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Identification Documentation- Partnership Business

Identity of all partners

Partnership agreement

Partnership registration document, if any

Meeting resolution of partners to operate business with IDLC

Trade license of business

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Identification Documentation Company

MEMARTS and Certificate of Incorporation

Board resolution to open the account with IDLC

KYC for controlling shareholders (20% ++)

Photograph of account signatories

List of Board of Directors (Form XII)

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Identification Documentation Association & Trust

Copy of constitution/Trust deed

Certification of registration (if registered)

List of member of the governing body

Resolution of governing body to open and operate the account

including nomination to operate the account

Identity document of account operator

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Verification of Identity Documents
Identity Documents Verification Process

NID / Passport / Driving License/ See the original ID

Any other photo ID issued by Preserve photocopy
government agencies
Present Address
Obtain customers signature on ID Copy
Mark as Original Seen & signature by the
concerned RM
NID-Cross check with ECB Database
See the original utility bill
Preserve photocopy
Obtain customers signature on utility bill
copy
Mark as Original Seen & signature of
concerned RM
Thanks giving letter
Physical visit / Third party

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Verification of Identity Documents
Identity Documents Verification Process

Trade License / MEMARTS / E- See the original documents

TIN / Preserve photocopy
Obtain customers signature on Copy
documents
Mark as Original Seen & signature of
concerned RM
E-TIN : Cross check with NBR Database

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Example of Documentation- Sources of Fund

Salary Certificates, Bank Statement showing

the name of the employees, employer's
Regular Sources certificate, Pensioners Certificate, Financial
Statements of Business

Land sale related documents, Baina-nama, sale deed, copy of BO

Statements to check initial fund

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Non-Resident Bangladeshi
Forex Regulation Act 1947

Reviewing the customers passport and foreign residency permit to ascertain whether
he/she is indeed a resident of the foreign country as claimed
If the customer is a salaried person, obtaining work permit, letter of introduction/salary
certificate from the foreign employer

Attempting to verify the existence and credentials of the stated foreign employer (Performing
a web-based search or Googling)

Obtaining copy of tax return filed abroad and statement of bank account maintained in the
country of residence
Statement proofs as evidence of foreign remittance
Record Keeping Requirement

Preserve records of customer and transaction for at least 5 (five)

years from the date of closure of the account/business relationship

Document of any account undergoing AML/ATA

investigation have to be maintained until the
dispute is resolved

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STR

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AML/CFT Reporting Structure

Chief Executive Officer

CCU

CAMLCO

BAMLCO

Operations Staff Customer Service Staff Relationship Staff

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STR Reporting Process

Close and document

Detect unusual Evaluation by
Satisfied? with proper
transaction / activity BAMLCO Yes
conclusion
No

Send to CAMLCO

Evaluated by CAMLCO &

CCU

Close and document

with proper Yes
conclusion Satisfied

No

Report to BB

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Safe Harbor

> STR is strictly confidential process

> There is very remote chance for the customer that will
be able to identify the reporting organization

Law has created safe

None can sue against
harbor for reporting
reporting agency for STR
agencies

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Tipping-off/Confidentiality of Information

Share any information of

STR with anyone even not
with colleagues

FIs employees Share any information of

shall not STR with the client

Share information with any

other external party, not
even with family members

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Indicators for Suspicion Type of Customer

Politically
Exposed
Public
Level of
Figure and
Income
Associates

Profile of
Individual Walk-in-
Indicators
and customer
Business

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Indications of Suspicion Behavior

Unusual/nervous
Excess curiosity about
Frequent address demeanour and
FIs/CMIs record-
change abnormal behaviour like
keeping
depositing at low interest

Customer discourages Reluctance in providing

Opens account in the
maintaining required document in support of a
name of family member
record-keeping transaction

Agent, attorney or
Large deposit not financial advisor acts
consistent with for another person
legitimate family income without power of
attorney

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Indicators for Suspicion Identification Related

Unwilling to provide
personal background
information
Furnishes suspicious Customer is not in your
documents business region/area

Asks too many

Reluctant to reveal
question about
details about the Indicators IDLCs record
business activities
keeping

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Indications of Suspicion.. Cash Transactions

Corporate
Customer opens account has
Tendency of tax
several accounts deposits and
evasion while
in one or more withdrawals
making a deposit
names primarily in cash
than cheques

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Indications of Suspicion.. Credit Transactions

Customer regularly
Customer suddenly
prepays or settles Customer opens
pays off a large
loan at a earlier term borrowing
problem loan with
stage with no receipts (TBR) and
no plausible
plausible uses them as
explanation of
explanation of collateral for a loan
source of funds
source of funds

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Other Indications of Suspicion

Indications of Suspicion

Type of business, i.e. drugs, jewelry, money exchanger

Geographic location
Type of counterparties and associates
Type of product, i.e. LC, sale and lease back

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Indication of Suspicious Employee Activity

Employee frequently try to avoid

compliance to regulations and
internal control systems

Sudden life style and mentality Such indications must be

change reported to higher
management

Lead lavish life style

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The Daily Star, Dated 22-March-2017
Prothom Alo dated 04-June-2017

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Cash Transaction Report (CTR)

CTR is required for CASH "deposit to or withdrawal of Tk.10 lacs or

more in FIs bank account in a single day

CTR will have to be submitted to BFIU through CCU within 21 days

of completion of each month

A declaration of STR will also have to be submitted alongside the

CTR report

Branches of FIs will have to maintain its CTR and corresponding

STR report

CTR is submitted through goAML software

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 CCU
CAMLCO
BAMLCO

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CCU (Central Compliance Unit)

FIs Senior Officials

CCU Committee CAMLCO

Key Functions:

Ensure compliance of AML/CFT regulations

Implement & enforce AML/CFT policy
Implement AML/CFT program
Review STR/SAR

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CAMLCO (Chief Anti-Money Laundering Compliance Officer)

CAMLCO is responsible for

CAMLCO ensuring effective run of AML and
CFT program across the
Organization

Key Responsibilities:

Contact Point with BFIU

AML/CFT Policy & Control
AML/CFT Program
Conduct Training
Coordinate to submit STR/SAR

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BAMLCO

Job Objective:

BAMLCO is responsible for ensuring

effective run of AML and CFT
program of the Branch

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Who will be nominated as BAMLCO

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Nomination of BAMLCO
FIs will appoint BAMLCO at each of their Branches

BAMLCO will be nominated through an office order/letter of nomination

issued by HRD

Responsibilities of BAMLCOs should be pointed out in the letter

Preserve the nomination letter along with acceptance signature and

date
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Formation of Branch AML/CFT Compliance Unit
AML/CFT Compliance Unit

Form a committee commonly known as Branch AML/CFT

Compliance Unit

The committee should consists of (at least) 3 members

headed by BAMLCO

Prepare a memo to form the committee & get it

approved by CCU/Management

Preserve the approved memo for future

reference
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Responsibilities of BAMLCO

Act as first point of contact

Ensure proper implementation of AML/CFT related programs

Confirm customer due diligence and KYC compliance procedure

Manage the transaction monitoring process

Detection of suspicious transaction/activity

Ensure timely submission of STR to Branch Manager/CAMLCO

Ensure timely submission of periodic returns

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Responsibilities of BAMLCO.

Coordinate with HRD to provide AML/CFT training for all the

staff of the respective Branch
Update and communicate AML/CFT regulations, policy,
circulars to all staff of the Branch
Conduct AML/CFT self-assessment and carry out periodic
meeting with the Branch staff

Inspire branch staff to comply with AML/CFT regulations

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Required Documents to be Maintained in AML/CFT Related File

AML/CFT Acts

FIs own AML/CFT

AML/CFT Policy Guidance Notes
Maintain a
particular file
relating to
AML/CFT rules &
regulations
All the Circulars Synopsis of FATF
issued by BFIU 40
Recommendations

UNSCR
Sanction List
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Branch AML/CFT Self-assessment
Scope of Work

AML/CFT related formal training for all the staff of the branch
Evaluate branch employees' awareness of the AML/CFT Acts, process,
programs and regulatory guidelines
Maintain training records
Periodic Branch AML/CFT meeting
Collection of customer identity information for individual, corporate, and
other accounts
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Branch AML/CFT Self-assessment
Scope of Work

Customer risk grading

Completion of KYC procedure for legacy accounts
Periodic update of existing KYC profiles
KYC procedure for floating customers
Source of fund based on customers KYC profile
Identification of cases of suspicious transaction
Process for identifying repeated structured transaction
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Branch AML/CFT Self-assessment
Scope of Work

Maintain a register regarding STR/SAR

Storing and disseminating AML Acts, Circulars, policy and other AML related
information among branch staff
Accounts of PEPs & LIPs as per AML Circular
Implementation of recommendations of AML/CFT audits conducted by
Internal, external auditor as well as Bangladesh Bank inspection team
Maintain a list of high risk clientele & follow-up their transactions and activities
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Quarterly Reporting of BAMLCO

Branchs
AML/CFT
AML/CFT
related
self- Prepare meeting
A copy of the self- meeting
assessment minutes
assessment should
be submitted to
CAMLCO within Submit a copy of
15th of the following the meeting minutes
month of the to CAMLCO within
respective quarter 15th of the following
end month

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Other responsibilities

Reply BFIU Reply BFIU

inquiries inspection report

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Remember.

Failure to comply with AML/ CFT laws

and regulations will lead not only to FI
being held liable but also to employee(s)
being held personally liable under
existing AML/CFT laws

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Regulatory Risk
Customer/beneficial owner identification and verification not done properly
Failure to keep record properly
Failure to scrutinize staff properly
Failure to train staff adequately
Not having an AML&CFT program
Failure to report suspicious transactions or activities
Not submitting required report to BFIU regularly
Not having an AML&CFT Compliance Officer
Failure of doing Enhanced Due Diligence (EDD) for high risk customers
Not complying with any order for freezing or suspension of transaction issued by
BFIU or BB
Not submitting accurate information or statement requested by BFIU or BB
Dont be serious, just be sincere

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Questions..

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